La Salle Investment Management and the University of Chester have submitted a joint planning application for a change of use of the 160 bedroom Chester Travelodge at Delamere Street to student accommodation.
The university is seeking to undertake minimal internal alterations, which would retain en-suite rooms and the ground floor communal area. The hotel has only been open since August 2010.
Chester University says its latest figures for this year's 2,561 first year students show that 41% are living at home, which should be reflected in their accommodation pattern in subsequent years when students traditionally opt for landlord-owned properties.
Of the remainder, 38% are housed in university-managed accommodation, and 21% in privately owned premises, although these figures will change when a new hall within the boundaries of the university's main campus on Parkgate Road completes this autumn.
Should planning permission be granted for additional student accommodation, the university predicts it would leave only around 6% of the first year population living independently.
The accommodation would be supervised in the same way as on-campus buildings, with a residential hall warden on-site and with security and portering services provided by the university.
Prof Tim Wheeler, Chester University's vice-chancellor, said: "Being equidistant between the university's main campus and the city centre, the Travelodge occupies an ideal location.
"If the application is approved, it would guarantee occupation during term time for students and also be a purpose-built venue for our conference delegates during the holidays."
Katie Badman, president of Chester Students' Union, said: "It would make sense to have university-managed accommodation so close to the city, on a route that students already use every day as they walk to and from the city centre.
"I understand the property could be ready as early as this summer, which would mean it could be offered to students applying for the 2013/14 academic year."